Quarter 1
Q4 2026 Earnings Call — May 28, 2026
Edison Yu (Deutsche Bank): Good afternoon. Thank you for taking our questions. I wanted to ask first on Equitas, can you remind us how do we think about the value capture you're looking to provide and what are you really seeking from some of the partner discussions you're having? An example would be, are you looking for someone to provide the satellite bus? Are you looking simply for customers? Just trying to get an idea of what the role of all the various parties here are.
Management: First of all, the basic idea on Equitas is shared infrastructure, which is really carried over from the terrestrial mobile networks environment where originally for terrestrial operators, they each had their own tower networks, but they were all doing the same thing. A single tower could support spectrum from multiple operators that reduced costs, and it really didn't affect the operator's ability to differentiate since they were using the same network. The fundamental idea of Equitas is to share network infrastructure and then to think of it as Biosat and Space 42 each as mobile satellite services operators rather than each having their own satellites, each of which only lights up a relatively small amount of spectrum. We can have common satellites that light up both of our spectrums, and then we can each perform our services with a lower cost basis, makes it less capital intensive, good for investors, lower cost, we can pass on to our customers, good for customers too.
So that's the basic idea. The other thing that is interesting about it is, given that what we're partnering on is a low Earth orbit, or LEO, version of it. Remember, the satellites are roughly evenly distributed around the world. So one of the opportunities to further improve cost efficiency and cost savings would be to invite other partners who may be regional operators. If I said global partners, Space 42 is not quite global, but they cover a lot of the world. But there are also a number of regional players where if they had their own LEO system, only a small portion of the satellites would be over that region. So if they share ours, it just reinforces the cost savings that we can achieve otherwise.
The other opportunity is to coordinate spectrum in a way that allows more spectrum to be brought into use. So those are the fundamental reasons to create an entity like Equitas, which is part of what the name is intended to apply, is that it's an unbiased shared common infrastructure similar to what you'd see in the terrestrial business. One set of partners, think of it as a multi-sided market, one set of partners that we're talking to are other regional operators. They could have terrestrial spectrum or they could have satellite spectrum that would benefit from sharing in that shared infrastructure because they have other parts of the value chain themselves.
So that's one set of partners that we're looking for. We also are looking to make sure that the infrastructure that we're building, think of the space infrastructures as cost effective as can be. So, Viasat is really providing the lead on network payload technology, most of all, you know, all of the networking beam forming those things and we are open to partners for other parts of the infrastructure value chain that could include launch buses. Those are probably two of the primary ones. It also could include potential low-cost manufacturers or manufacturers who are associated with given geographic regions and would be preferred by their regional spectrum holders or service providers. Those are the flavors.
We also think that Equitas, as a standalone company, is going to be a good investment. It should have really good opportunities for growth as we add partners and the market for these services grow due to things like autonomous vehicles, whether land, sea, or air, direct-to-device, as well as the traditional mobile satellite services that we each provide now. Does that help?
Edison Yu (Deutsche Bank): Just one follow-up. I appreciate all the color. I believe in the shareholder letter, you did mention that you're aiming to deploy services in 2029. Um, so I guess for the bus and for the launch, when do you start needing to actually need to nail those items down, like selecting a bus provider, getting a launch, getting on the launch manifest? Cause you know, the guys out there are pretty full. So when do those decisions, those kinds of big decisions on those two things need to be made by?
Management: They're being made now. And I think what Space 42 has recently disclosed, and we support that, there should be a follow-on investor conference that we'll have that will just focus on Equitas so that we can answer these more detailed questions. But we're just waiting to finalize all of the associated basic agreements before we do that, before we disclose those details. But we do have, but obviously, I think your point is, yes, if we're going to be in service in '29, we need to have those things in the works now, and we're aware of that, and we'll give more detail as soon as those agreements are concluded.
Brent Panther (Raymond James): Hey, good afternoon, everyone. Thanks for taking the questions. A lot of detail in the letter and opening remarks. You talked about how you stand to benefit from vertical integration and DAT's role as a technology provider, including having a role in Equitas. Can you update us on where the strategic review of the DAT business stands and how those benefits could be maintained should you decide to go down the path of a split?
Management: Yes. I mean, I think, first of all, we've had lots of good input and evaluation about the potential for a spinoff. I think that, you know, let's say the core element of that is that there's a good growth opportunity in defense and these advanced technologies, and the real issue is, you know, can it be an appreciating asset? If it's an appreciating asset and it's going to grow, it's going to have value either within the company or without. There may be a little bit of a difference or some difference based on whether it's a standalone equity or part of a larger company.
But the core issue is, is it an appreciating asset? And right now, we're in an environment where dual use is really important from a commercial and military perspective, but so is the element of both having the technology and the services component that goes with it. And it is interesting that both teams, that one on PTSG, do have the ability to both operate as well as develop the technology. And what we see, if you look at what the long-term goals are for PTSG, it would be a substantially larger fleet of much smaller agile satellites.
There's certainly this element of both the dual use and the vertical integration between technology and services. And it's a big potential franchise. I mean, it's a multibillion-dollar opportunity. So at least as long as we can see that we're going to be better positioned in this element of space and mission systems by keeping it within the company, then I think we'll do that for some period of time. But, you know, think of it as spinoff is more of a one-way door. While we have it and it's growing, it still gives us optionality.
Brent Panther (Raymond James): Thanks, Mark. And then another kind of strategic question. In your opening remarks, you talked about how spectrum holders like Viasat and Space42 will maintain their spectrum licenses and obligations in Equitas. We've seen some very high valuations for spectrum recently, so I just want to make sure if the opportunity arises for some higher shareholder value use of your spectrum, what kind of flexibility does Equitas give you and how would you approach those opportunities?
Management: From the Viasat perspective, the core issue is the value from developing the spectrum or bringing the spectrum to market greater than or equal to the value of transacting the spectrum. So in order for us to have a good sense of what the alternative value is, what we're looking for is a vehicle to bring it to market. And Equitas represents that. We think it's very capital efficient because Equitas doesn't solely depend on us bringing it to market. It's basically going to serve multiple different spectrum holders. I think that makes it attractive as well.
And it also makes it attractive to us as a cost-effective way to be able to bring it to market. The other thing is because the spectrum resides with us, we have the opportunity to think of it as it doesn't have to be binary. We don't have to sell all of it, nor do we have to bring all of it to market. We can look at either different geographies, we can look at different market segments, and make sure that we're getting the best value for our shareholders through some combination of transacting and developing, which could be all of either one, but doesn't have to be.
It's a very dynamic market, and things are playing out. But right now, it seems, and we can see this both from looking at transactions in the market, and looking at what the demands are, that we can be really well positioned to develop it. So as long as we see that, we can continue down that path and still have optionality.
Sebastiano Petty (J.P. Morgan): Hi, thank you very much for taking the question. Maybe going back to Equitas real quick, following up on Edison's question. So, Mark, is there anything you can perhaps share about the capital structure or the funding mechanism and what Viasat may help us think about the contribution perhaps or the investment that Viasat might make above and beyond spectrum? Because that's kind of a little bit of a debate out there in the market as we think about the value unlocked from Equitas. Are you bringing the spectrum to market? Are you bringing the spectrum to the JV and some of the expertise from a technology perspective? But should we also consider perhaps contribution from a capital perspective as well, coming from the Viasat balance sheet?
And then maybe shifting gears to aviation for a second, you talked about the growth slowing because of competition. Any help in terms of is that fully on the commercial aviation side? What are you also seeing on the BA side? And Gary, I think in your prepared remarks talked about, you know, the backlog is going to be installed from existing commercial agreements. Help us think about, you know, what's the posture of current RFPs in the market now and, you know, your expectation for jump balls, I guess, from here. Thank you.
Management: Let's cover both. First, on the Equitas side, you know, we will discuss the cap structure more in detail when we conclude the agreements. We think that Equitas will be, you know, ultimately it will be financed through some combination of equity and debt. We'll talk about that, what our plans are, what we think the overall infrastructure needs sort of the range of budget will be when we conclude the agreements. And that shouldn't be that far away.
The other thing I would like to just clarify is we're not going to be contributing spectrum to Equitas. We can play our spectrum through Equitas. We will play some of our spectrum through our existing and expanding geo fleet as well. So think of it Equitas, but really Equitas's value proposition is to investors, including us, you know, to the extent we participate in the cap structure is its value proposition is that it's the lowest cost way for anybody that wants to play spectrum through space.
It should be the lowest cost way for them to do that. And there's an opportunity to grow the initial constellation substantially to meet the demand as it materializes in these mobile satellite services and D2D markets. So we'll give more clarity on that when we do the follow-up discussion.
On the aviation side, think of it as there's several factors at play. First on commercial aviation. What we're seeing is more and more of the airlines that do have in-flight connectivity are opting for some form of free model or third-party paid model, which greatly increases the take rate, right, or user penetration. And so that tends to lift the average revenue per plane.
On the other hand, what we're seeing is with increased penetration and increased usage on a passenger basis, it takes a lot more bandwidth to play. So I think that getting the Viasat-3s in service certainly makes us way more competitive on that front. The other thing that we're seeing is that in-flight connectivity is a really popular feature among passengers. It influences passenger preference for airlines. So the number of planes that are being outfitted is growing relatively rapidly.
What we are anticipating is that, just what we said, that we'll see net good growth, but probably at a growth rate that was lower than it had been going into this year, partly through more planes. And there will be some, you know, we'll find out what the market price is through competition, through this combination of increased penetration, increased per capita use. Those are the factors.
Sebastian, I think you also had a question on backlog. But before we get to it, just to clarify on Equitas, you know, we're obviously still in an active discussion. We don't want to be negotiating that in the public. What we have said is, you know, we also want to avoid, you know, reading too much into snippets when, you know, as Mark described, when we're ready, we'll provide a full picture that will give you, you know, a good sense of it.
What we have said in the interim is that the impacts will be consistent with, you know, the financial journey that we keep talking about. So, you know, that part we can say now. You, I think, had a question on that. I don't know. I was going to just talk about the general aviation part of it. On the general aviation part, I think that what we're expecting is overall the opportunity is while the high-end segments of the general aviation market are pretty well penetrated, that would be certainly global, like global long-haul large jets.
I think that we'll see greater penetration among lower-tier jets. But again, it's going to be a more competitive market than it has been. We still think there's growth opportunity, but there's just going to be more competitors involved. I think those are the main dynamics there.
James Fratzer (New Street Research): Yes, thank you very much. Yeah, good afternoon. Yeah, Mark, so thank you. Another question possible, if please, on Equitas. Can you give us an update on your thinking on how much of your existing L-band spectrum you actually think you can use through Equitas for D2D services without kind of affecting your existing operating business?
Management: So that's to be determined. There are a couple of factors that are involved. One is with, you know, when we augment our geosatellites with low Earth orbit satellites, we'll be able to achieve much higher power flux densities on the ground. These higher power levels will let us get much more bandwidth through than we can now. So we could deliver the same services using only a fraction of the bandwidth we currently have.
What we are expecting is that in some cases, the market will grow as a result of the ability to deliver higher speeds and more bandwidth per unit price. And so we'll just have to see how that plays out in the market. But from our perspective, these mobile satellite services, A, it's part of our public interest obligations, so we're certainly going to prioritize them, and it's a good use of our spectrum and our assets.
It's a good return for shareholders and customers, so we're likely to prioritize that. However, the total bandwidth consumption in the D2D market could be very, very large, and so we see that as a way to bring all of our bandwidth into play. The other factors, I'm sure you're probably aware of, is depending on the final 3GPP specifications and the spectrum chunks that the mobile devices support, we'll end up with, you know, as an example right now, people are looking at spectrum in contiguous five by five megabits chunks.
So that may turn out to be a way that we segregate the spectrum, where the amount that goes into spectrum fragments that are consistent with the device specifications goes towards D2D, but all the rest of the spectrum certainly can be used for the mobile satellite services. So that's another way for us to allocate it, but ultimately it will be driven by market demand.
James Fratzer (New Street Research): Got it. And actually, we're following up on that point and continue on spectrum. I'd love to just hear your thoughts on the announcement yesterday out of the EC with regards to the S-band. Would you like to kind of reapply for those spectrum rights beyond 2027? I think you're now going to be limited to 10 megahertz in the S-band. Would you bid for the maximum you can get there? Or do you think there's now actually kind of increased scarcity in the L-band? So maybe it doesn't actually make sense to reapply in the S-band and you can maximize more value through the larger contiguous channel you've got in the L-band.
Management: So right now, one of the things that we think is a strength for us is through the Inmarsat acquisition, we have S-band in Europe for what's called the European Aviation Network. One of the good things is that we brought that to market. We've actually followed through, built the infrastructure, operate the service consistent with what the application was. It's on hundreds of airplanes now.
It is a good fit for the short haul market in Europe with a lot of smaller planes compared to some of the higher frequency bands. The main thing that we're seeing now is that network would benefit from being modernized, that is, being able to support the same things that we described were going on in aviation in general, more passengers per plane, more bandwidth per passenger.
And so that is a really good application where the Equitas constellation could modernize that. We absolutely will be applying to extend it. I think just to be clear, currently the spectrum is divided into two holders, each with 15 by 15. They describe holders having 10 by 10 or 5 by 5, some combination of those chunks. So, you know, we will apply.
I think because we're operating the service now with European partners, I think we have a good chance of being extended. I think the guidelines suggested an increment of another seven years. I think that certainly there's going to be a public benefit component to their decision. I think we're going to be a good candidate from that perspective.
Justin Lang (Morgan Stanley): Hi. Thanks for taking my questions. Just one on that. I think you called out a few potentially significant opportunities that could mature in the first half of your fiscal year. Can you just talk a little bit about what those opportunities are and what we should watch for? And then I was just to clarify, was the suggestion earlier that orbital data centers could represent one of those opportunity areas, or is that really longer term?
Management: The data opportunities that we have are really relatively big opportunities across the board in the three main areas that we report. That would be the cryptographic security issue area, space and mission systems, and tactical data networks. We're seeing opportunities across each of those. The tactical data networks, a lot of it is international opportunities as well as opportunities to apply those ground networks to autonomous drones and autonomous vehicles.
Those are two of the good opportunities there. One of the things that we've pointed out in the past is that there is kind of an accelerated program in the U.S. government to upgrade its cryptographic infrastructure, communications encryption infrastructure. The big issue there is whether or not we can meet the schedule, and we think we're doing well at that. Clearly there's demand in that area.
And then the third area is space and mission systems, and the big opportunities we're seeing there are dual use applications of the commercial systems that we have and are adding to our fleet, and then also the government specific programs that we're seeing in areas where we compete well. Like, for instance, PTSG is a really good opportunity.
And then finally, the other area that we do put in that as well would be new technology development or technology sales that can cover commercial or scientific missions. And so one of the programs we've talked about in the past that still seems to be a really good opportunity for us is the Moonlight Program, which is the lunar space, you know, the lunar relay program.
Certainly interest in the moon is definitely increasing, both in the U.S. and in Europe. And then another one would be commercial satellite programs. That would use a new generation of technology, and that includes ATL and S-band as well as NKA band. I describe it as a target-rich environment for us across the board of those areas.
Mike Crawford (B Riley Securities): Thank you. I'd like to turn back to some of the technologies and areas of expertise that you say you have that can help enable data centers. Solar power, thermal, radiation hardening. Obviously, with your ability to do the beamforming and reuse the spectrum, you're good on the last two, orchestration and broadband comms. But I'm not aware that you have solar power IP. For instance, something that could help enable getting a 200-kilowatt satellite for only a million dollars is what some people think is required for computing space. Can you just maybe flesh out some more of these capabilities you have?
Management: Yes, and just to cap off the last question because I didn't address it, we are not going to be building space data centers ourselves. The real opportunity for us is on these overlap technologies. And so I'm pretty sure that Viasat 3 at 25 kilowatts of end of life, that's end of life power generation, I think is the largest commercial satellite ever, and the big and it's actually so far at the beginning of life well in excess of that specification.
Some of this issue about what the peak power will be is going to depend on beginning of life versus end of life and how long the life is. But that's a big solar structure. And, you know, there's different parts to it. One part is just having a large structure. Another part is building space vehicles that you can stabilize and still maneuver when you have these very large structures attached to them.
So that has implications not just for the solar generation itself, but certainly for any other deployables on the spacecraft and the overall structural approach to the spacecraft. So we do have good experience there. We basically did virtually all of the thermal dissipation issues on that satellite. And that is probably, that again is one of the most significant most challenging aspects of it.
So the opportunities for us are really to work with partners who are probably more interested in operating the data centers, but are interested and willing to develop technology that we can then deploy into space to prove these things on communication satellites. That's a big opportunity for us. So we're seeing opportunities from both government and commercial organizations that are interested in that.
One of the good points I'm going to put in for working with Space 42, their parent organization is G42, which is an AR company. So there's real interest in that community for some of these enabling technologies that we'll be able to advance.
Management: This concludes the question and answer portion. I will now turn the call back to Mark for closing remarks.
Management: Okay. So I know that we've covered a lot. Thanks, everybody, for your attention. And stay tuned for as we described as if we can once we get all the Equitas agreements wrapped up, which we expect to be relatively near term, then we will follow through on that we'll have a follow-up conversation just focused on Equitas. Thanks again for joining. This concludes today's call. Thank you for attending. You may now disconnect.
Quarter 2
Q3 2026 Earnings Call — February 5, 2026
open it up for questions.
Your first question comes from the line of Rick from Raymond James. Your line is live. Sorry. Hey, can you hear me okay? Yes. Okay. Sorry. Several earnings tonight, so I'm trying to not overlap on the sound. Sorry about that. Yeah. Hey, a couple questions. First, on the all-important Flight 2, Flight 3 launches and services, it looks like maybe a little bit of a delay on Flight 2, saying now May versus early 26th. and then Flight 3 will go up, hopefully launch shortly after Flight 2 in service. How fast can Flight 3 get into service? Are there differences given the rocket you're using as far as how fast that can get in service? Yes. Yeah. The Flight 3 will probably have more like a two-month orbit raise as opposed to more like 100 days for Flight 2. So that will get it. That's kind of the dominant factors that were raised in terms of time from launch to in-service. Great. And as we think about the strategic review you all are going through, obviously, this is not something you take lightly or that you would do without careful review. It's a long process, not necessarily a quick process, obviously.
But it seems like, as I read through the comments in the letter and I listen to you on the call, You want to see flight two and flight three successfully go in service. You want to see macro market conditions of the segments. You want to see achieving de-levering and free cash flow generation. Boy, it sure looks like the tick points are starting to come along where that decision process and any external gating factors that might affect it are kind of getting knocked down. Is that the right way to think about this, that kind of opens up the aperture of when you might do something? Yeah, I think you've got the factors right. Those are the things that we're looking for, and they'll all go into the mix of what we decide to do and when and how, if anything. I just want to be sure that we're evaluating and we're going to look at. All right. And you got the factors just right. Okay. Okay. Makes sense, and the progress goes along there.
And then kind of the wacky question then is, and there's been a lot of stuff going on in space, what are your thoughts about data centers in space and AI with space? Just trying to think, as you think about you want to target fast-growing segments and profitable segments of space, where do those fit in your calculus? Okay. Yeah. So on the data center side, I think that the – the entire premise really hinges on power generation in space. That's the ultimate, that's what the ultimate test will be, is does it, will it ever make sense that you can generate power more cost-effectively in space than you can get it anywhere on Earth? So, I think that, and that's an open question, I think that Along the way there, and this is what I think other people have identified as well, kind of the two of the big swingers there are going to be how efficiently can you generate power in space from solar cells, and then how efficiently can you dissipate the heat from all that power off board the satellites. So from our perspective, Work in those areas is really helpful because it improves the productivity of communication satellites as well.
I think there's another aspect that does get some coverage, but probably not as much as it should, which is what is the orbital, you know, debris mitigation plan or sustainability factors associated with the amount of mass that's required for those data centers in the surface area. for those data centers, and does that provide a gate or does that create a gate or a limit to the amount of power you can generate, at least in near-Earth orbits? From our perspective, we don't have any plans to be in the data center business. You know, everybody does note that if you want to be in the data center business in space, you're going to need a lot of communication capability to and from that. And so that part we're certainly interested in, and we're certainly interested in partnering with others that might want to actually put the compute storage resources in space. Great. It is.
And so when you think about fast-growing segments that you'd be interested in that would fit kind of your capital intensity and your free cash flow generation that Gary was talking about, what should we think are kind of the top – one, two, three, four, five segments that you think make great addressable markets for what you guys bring as far as competitive advantages? The two areas, if you look at it from a technology perspective, think of it as the broadband sector, which is kind of K-band and higher frequencies that are being used for broadband communications. We see that there has been, for the Last 10 years, you know, lots of demand growth as unit prices come down, get more speed, more volume, per unit cost, and those markets have grown. We still think there's quite a bit of growth in there and that we can certainly compete really well in that space. And then there's, you know, the whole tradeoff between fixed and mobile uses. The mobile uses, certainly, you see lots of growth in those parts, and especially given what's expected to be a substantial increase in autonomous mobile platforms. The other area, from a technical perspective, is going to be the L-band or the low band.
People refer to them as mid-bands. And that market, right now, if you look at a range of analyst estimates, that could be one of the single largest markets. in the satellite communications space. Within those two categories, within the broadband market and the L-band market, we really see a number of vertical markets. In the broadband market, certainly mobile platforms is one of the biggest and most interesting. And within that market, government applications is really a big opportunity. and one of the big trends we highlighted there we think is going to be sovereign ownership that is international and domestic applications so that's going to be operating those networks designing the network building the networks but a lot of them we think ultimately will end up under control of individual countries as opposed to outsourced to private enterprises when those countries are going to be so dependent on that type of communications for national security.
Also, the other thing we see coming in the mobility market is that just as a consequence of some of the geopolitical conflict around the world, there's large parts of the earth that are just closed off to access to navigation and communication services, and we think those services that ship owners, airplane operators, they're going to want to be able to navigate and communicate through those, not necessarily over individual hotspots, but in the surrounding areas that often are contended. We see big opportunities that are kind of a mix of commercial and government in that broadband mobility area. And the big difference between the L-band mobility area and the broadband area is think about L-band will have higher unit airtime costs, probably lower speeds just because there's way less spectrum to work with. But the antennas that you can use for that are going to be really small, very small, omnidirectional. That's like conventional cell phones, IoT devices, watches. And, you know, in the history of satellite communications, One of the main barriers to growth has just been having people with terminals capable of working with your satellites.
And so the big thing that's happening in this deep D2D NPN, non-terrestrial network space, is, boy, there are going to be literally billions of devices that are connected. And as long as you can do the handovers quickly and well, we think that as long as there's interoperability between the terrestrial and satellite domains, well, that's going to be a big market. And that's going to be for consumer use, enterprise use. It's going to be on autonomous vehicles. There's going to be some question about how quickly each of those markets develop. But ultimately, just like in terrestrial, having spectrum that works with those devices is going to be a prerequisite to being able to participate where we feel that we've put ourselves in a good position as one of the very few operators that really has access to both the broadband microwave frequencies and the mid-band, L-band frequencies, and can deliver that continuum of service. So that's, you know, in a nutshell, that's what we're really aimed at with our satellite services. As a Norway in a nutshell, that was satellite in a nutshell. I appreciate that. And good to have Spectrum and good to have satellites about to come in service.
All right. Thanks, guys.
Your next question comes from the line of Sebastiano Petty from J.P. Morgan. Your line is live. Hi. Thank you for taking the question. I guess, Mark, related to your response to Rick's last question, just thinking about in the past you've talked about a tower model as it pertains to directed device. I mean, can you perhaps maybe elaborate on that? I guess, what gives you confidence that we'll see, you know, two plus three D2D players that can perhaps emerge over time, particularly without the, you know, requisite, you know, spectrum that's out there, right? I guess that's kind of my first question. I think maybe the sovereign angle probably answers part of that. And then relatedly, I guess, to the end of the prepared remarks there, just kind of thinking about equities and the L-band spectrum or just your overall spectrum ownership. I guess, you know, I understand growing the value of the franchises, but we're also at a point in time now where perhaps spectrum might be a little bit, you know, satellite spectrum is in vogue and very hot right now.
And so just the considerations there of, you know, is it about controlling your own destiny and maintaining option value long term? Thank you. Okay. So for the first question, one is there is a fair amount of satellite spectrum that has been allocated to mobile satellite services and has been for like 40 years. And those satellites serve real and valuable functions for for people that don't have access otherwise and, you know, or depend on the weather resilience of those frequencies compared to the microwave stuff. So, you know, KU-BAM is great for, you know, 100 megabit or plus higher speeds. That's a really nice feature.
But the fact that it is highly attenuated in storms is a big issue for maritime as an example and for some other users as well. there are you know the spectrum has been allocated there are multiple players that have it often countries who use it for national security purposes or who worry about you know having you know literally millions of people in their countries with devices that can completely bypass their terrestrial infrastructure are going to and have been asserting their requirement that operators in those countries comply with national telecommunications regulatory laws. So we think that there are good reasons for that. They're not technical reasons. They're more national security sovereignty reasons and other safety reasons. So We think that those are just going to be requirements to play in the market at a large scale in many parts of the world. So we, one of the reasons we're interested in Inmarsat in the first place was, you know, it was formed as an international organization to solve some of these issues around mobile satellite services and the need for that.
And we still have really good relationships with a lot of countries around the world where we can work through these problems as we evolve the capabilities. And so that is one part of the issue about why we think there will be multiple players. The first part of
your question is related to some extent, which is the issue about high power. So... I think it's not always well understood that the thing that creates the potential of communicating with an office-shelf terrestrial cell phone is increasing the power levels that are allowed for mobile satellite service. And we're talking about power levels on the surface of the Earth. It doesn't really matter what altitude you're generating them from. You know, the big issue, one of the issues that always has been an issue, an issue in basically all wireless spectrum uses is how high of a power can one operator reach or radiate at without interfering with neighboring frequencies. And so that has been one of the main issues.
That's probably been worked more in the U.S. than others, and a lot of focus has been on to satellite emissions that can interfere with terrestrial cellular of course anybody that wants to do it uh from satellite at these power levels is also going to have to coordinate with other satellite operators right that so that's one of the things that we've been really focused on and uh just to be clear The 3GPP standards, which is what the chip designers and handset designers are working towards the infrastructure, everybody's working, do call out these higher power levels that would be required, with higher power levels required for the broadband services versus the narrowband services that are already in service and that we're participating in service for right now. So, I mean, these are... kind of the same fundamental issues that all satellite operators had to deal with for decades. They're not going away. I think there are solutions to them. We know what our constraints are in terms of interfering with neighboring operators, and we are designing our network in a way that it both achieves what's required in the 3GPP standards and does not interfere with neighboring users.
And that is an artifact of our system design and who our neighbors are. So that's how we're doing it. We think we have a good spectrum for that purpose, and we think we understand the issues well and are addressing them. Thank you, Mark, for being here.
The next question comes from the line of Ryan Kuntz from Need Animal Company. Your line is live. I wanted to ask about the IFC, and you announced this new next-gen terminal with Telesat. Maybe you could expand on what's attractive about their Lightspeed constellation for you, Mark, and how that, you know, differentiates from other opportunities out there. Okay. Yeah, thanks. What we're looking to do with Telesat is basically recreate what's been working in the maritime space in a multi-orbit system. In the maritime space, there's a lot more room on board ships, and it's easy to put on multiple antennas. And so for the Nexus Wave service, which has grown, has had really good market reception, and we're getting good good adoption and financial results on and uh it's been in use for about a year uh so we've got good good field results i mean the that's we're using a ka band broadband service which uses our geo satellites plus ku band leo and we do that with two different antennas with uh with our new aero services we'll have a a new single antenna that can operate both at LEO and GEO simultaneously effectively. So we'll do there just what we're doing in the maritime space.
Essentially, we're using the GEO satellites to provide the bulk of the bandwidth and LEO satellites to manage traffic that is latency sensitive. So what you get This is you get the cost benefits of geo, which not all geo satellites are the same. We've been really focused on putting bandwidth where there's demand at very low cost per bit and being able to move it around to follow these mobile platforms. All that stuff works well. The big thing we're going to do in Aero is instead of having two antennas, we'll have one antenna. That can do both LEO and GEO. At the same time, we primarily route the latency-sensitive traffic, excuse me, over LEO. And, you know, the vast majority of the traffic tends to be video, which is not latency-sensitive at all, very well suited for GEO. So that's the basic principle behind that. I think that... The last tell us that it said is that they expect to start to be launching their LEO satellites by the end of next year. And so that's when we'll be able to offer that service. The other point I would make is even our existing CABE and aero terminals are capable of operating with the LEO. They're just not capable of doing both at the same time. I see.
Awful. And then maybe kind of big-picture question about once you get F2 and F3 in service here, it sounds like a third-quarter time frame. What's the time frame from which you really start to see a revenue inflection, time for that comm services business to turn around? Are we talking about a couple quarters, or how should we think about that on a modeling basis? I think – so we've had steady growth in – Pretty much everything except for residential has been a headwind for us. Maritime, we've seen slight downturn, but we're expecting that based primarily on the Nexus Wave service to be back to growth again by this quarter. So we think we'll see. you know, good continued growth in those services plus growth in the government services. On the residential side, you know, we're not going to give the projection right now, but it'll probably take a few quarters for us to get terminals out in the field and to see that, you know, at first what we're going to be aiming for is that we slow the rate of decline, and then we think we'll level up and be able to grow that business a little bit. Mark had said in the past he's referred to it as, you know, being paced by the demand.
And we have a lot of opportunities, you know, on the unit side as well as, you know, continuing to upgrade some of the service offerings like you're seeing in aviation. Right.
Thank you.
Your next question comes from the line of Mike Crawford from B Reilly. Your line is live. Thank you. Back to the evaluation you're doing on your government assets, could you just walk through some potential scenarios of how you would manage these, quote, key dependencies of satellite assets if you were to separate, say, the debt business from the rest of ISAT? No. No. i think i mean you're on the right you're on the right track uh you know in terms of the issues that we need to resolve right and so that is that is part of what we're going through both from a capital structure perspective from a technology perspective part you know perspective potential licensing or other class agreements that that's what we're going through and uh those would be the factors that we're not going to speculate. I think at this point there's just too many ways to go about it. We're not, I think we're trying to make sure we do a really thorough evaluation and it may evolve over time. We'll be able to speak more about it after we've gotten through these gates. But the whole thing is we are very focused on shareholder value. We're not going to dismiss things that will drive shareholder value.
But we also, you know, we're going to make sure that whatever we end up with has a, that we think has a good competitive position in the growth markets and then can get the shareholders can get the benefit of those things. Okay. Thank you, Mark. And just one final question from me. Just, you know, given this, This global refresh driven by quantum-resistant cryptography and your historical leadership position, information security, protecting data on the movement at rest, are you seeing your position today as competitively the same or stronger or may perhaps threaten by emerging competitors? Yes. You know, we're seeing good growth in that business. We think we're – the way I put it is I think that our competitive position has probably improved a little because of the urgency of the problem, and the market size has improved a lot because of the urgency of the problem. So we're pretty bullish about that area. Okay, great. Thank you very much.
Your next question comes from the line of Eberson Yu from Deutsche Bank. Your line is live. Hey, thanks for taking our questions. I wanted to actually come back to your comments about the space data centers. Let's assume that on the energy side, efficiency side and everything, that kind of gets sorted out. Do you think spectrum is or becomes a limitation? And I ask that in the context of There was an announcement by Blue Origin around TeraWave, and they seem to be using or wanting to use very high frequencies, Q-band, V-band, and doing like an optical from Neo to ground. So just wondering if spectrum then becomes some type of constraint. Yes. So I think you're already seeing a migration to higher RF bands. So, you know, from KU to KA. Now V-band is, you know, coming more into play. E-band will probably come into play as well. So that opens up more spectrum. Ultimately, I think the number of people have talked about optical links from space to ground.
And, you know, one of the benefits of optical links is it's very easy to support large numbers of different operators, each with large numbers of satellites without interfering with each other, that it's going to, you know, at some point, if there is to be a big market for data centers and space obstacles, you know, space to ground links has got to be a significant part of it. Okay. And separate topic, I know you're working – in the pipeline on a sort of micro or mini geosatellite. Wondering any updates on that, and is that something you think could become kind of more prevalent in the future? Yes. Yeah, I think, you know, basically one of the points I would make is, you know, I think we've been holding our own and competing pretty well without having any new broadband satellites, you know, while competitors have launched thousands and thousands of satellites, we've really been working up, been able to deliver competitive performance and pricing without having a lot of new bandwidth in space. We're going to get a lot of new bandwidth in space this year. I think that's going to help our business a lot.
So we know that given the market growth and the consumption growth that we're we're going to want follow-ons, and we're going to want follow-ons in specific areas. So the strategy that we're working on, and I think we'll be able to disclose more of this over the course of this year, once we get through getting the other satellites in service, is to come up with satellites that cost a small fraction of what the current ones do, but have even better unit productivity. So that's what's going to allow us, we think, to maintain and improve our competitive position in the satellite broadband space. And so we have, you know, we're not going to end up with large, you know, multi-hundred million dollar single investments that are, you know, where we have big exposure for large capital bites. What we'd like to do is have much, much smaller satellites that are much less expensive, that have pretty comparable capacity, and we can put wherever the hot spots are. And I think that's going to drive.
One of the things we keep talking about is how do we drive down capital intensity? That's a big component of it, and that will drive a return on capital, which is clearly the way that we're going to deliver more shareholder value. Great. Thank you. Thanks, Anderson.
Your next question comes from the line of Justin Lang from Morgan Stanley. Your line is live. Hi, great. Thanks for speaking to me in here. Mark, maybe just quickly back on the strategic review, I'll try one here. You know, a large defense prime just a few weeks ago announced a planned IPO of one of its businesses with the U.S. government as an equity investor. Curious if you see any particular merits or attractive elements in this sort of structure as you think through the the optionality around that business. Wow, that's an interesting one. Okay. You know, I think, yeah, look, I think that part of that's going to be around the priorities of individual governments. And I think that right now the U.S. government seems to be taking an interest in and providing some benefits to what otherwise had been purely private enterprises. So if those, you know, to the extent that those are available in a competitive position and shareholder value, that's an interesting thing to do. There are maybe more instances of that internationally, and so being able to do so internationally would also be a benefit.
I'd say that those are examples of things that we might look at when we consider some of these more fundamental strategic capital structures. Great. That's great, Kelly. And maybe just quickly, Kerry, and I might have missed it, just for a little more color on the revised CapEx outlook and specifically whether the new guidance reflects more of a push-out of some of the planned investment into 27 or just trying to understand if it's timing-related. Thanks. Yeah, generally not. We did note there was $40 million that we expect to continue into fiscal 27 from the Viasat 3 spend that we've been talking about. Beyond that, the rest of it really is efficiency-driven. And, you know, we've had a big focus here on making sure that we're efficient with our capital. It has not at all been about cutting or reducing capital. And everybody has embraced it. I think we've done a nice job of it. So other than that $40 million I described a minute ago, you know, it's real efficiency gain. Got it. Thank you both. That concludes the question and answer session. I'd like to turn the call back to Mark for closing remarks. Okay.
We appreciate everybody joining us for this past hour and all the questions and look forward to speaking again next quarter. That concludes today's meeting. You may now disconnect.